LONDON (Reuters) - Fund managers are rebuilding a big bullish position in U.S. gasoline futures and options - even as they remain on the sidelines across other petroleum contracts.
Hedge funds and other money managers raised their combined net long position in the six most important futures and options contracts linked to petroleum prices by 22 million barrels in the week to July 31.
Net position changes were small in Brent (+5 million barrels), NYMEX and ICE WTI (-5 million barrels), U.S. heating oil (+3 million barrels) and European gasoil (+5 million barrels).
But portfolio managers raised their net long position in U.S. gasoline by 15 million barrels, after increasing it by 11 million barrels the week before.
Funds’ long positions in gasoline outnumber shorts by 105 million barrels, up from a recent low of 78 million at the end of June.
Positioning has become exceptionally stretched, with bullish long positions outnumbering bearish short ones by more than 25:1.
In other contracts, however, hedge fund activity has remained subdued over the last two weeks, after heavy liquidation in the middle of July.
Long positions remain very high (1.16 billion barrels), but well below the record set at the start of the year (1.63 billion).
Short positions continue to trend downward and now amount to only 110 million barrels in total across all six contracts, just 1 million barrels above multi-year lows.
With the exception of gasoline, fund managers may have become less convinced prices will rise further - but few are willing to bet that they will pull back significantly.
John Kemp is a Reuters market analyst. The views expressed are his own.
- Oil prices steady as fund managers cease liquidation (Reuters, July 30)
- Oil market hits a cyclical pause (Reuters, July 24)
- Hedge funds slash bullish oil positions after prices peak (Reuters, July 23)
Editing by Alexander Smith